iPhone 17 Pro. Photo courtesy of Lotte Hi-Mart
Samsung Electronics (005930.KS) may potentially manufacture the brain chips used in Apple’s iPhones, according to reports. If the partnership materializes, it would mark a milestone in the revival of Samsung’s foundry (contract chip manufacturing) business against TSMC, expanding its orders for key iPhone components following image sensors (CIS) while overcoming the setback that forced it to abandon production of its own chip three years ago due to yield issues.
According to Bloomberg on Monday (local time), Apple executives recently visited Samsung Electronics’ fab (chip factory) under construction in Taylor, Texas, to discuss cooperation on producing advanced chips for its major devices. The chips in question are reportedly Apple’s in-house-developed system-on-chips (SoCs), or application processors (APs, brain chips), including the A series for iPhones and the M series for iPads and MacBooks.
APs serve as the brain of smartphones, integrating the central processing unit (CPU), graphics processing unit (GPU), neural processing unit (NPU), and communication (modem) chips. Apple in particular has developed industry-leading chips in-house, splitting the premium AP market with Qualcomm’s “Snapdragon” series, which powers the Android camp including Samsung Electronics’ Galaxy series.
Apple is also known for demanding stringent technical conditions from its component suppliers to secure the highest performance. As a result, the company has outsourced all of its AP production to Taiwan’s TSMC, the world’s top foundry. If Samsung Electronics wins this order, it would take some market share from TSMC and showcase its foundry technology to the world. Given that Samsung Electronics scrapped the launch of its own AP, the “Exynos 2300,” in 2023 due to foundry yield problems, the deal is seen as an opportunity to dramatically elevate its market position in just three years.
Samsung Electronics also took on the production of CIS for iPhones at its Austin fab last year. The industry analyzed that the expanded order discussions come as foundry orders have surged along with Big Tech’s demand for artificial intelligence (AI) chips. Expectations are rising that Samsung Electronics will also benefit as TSMC, which is flooded with orders, reaches the limits of its production capacity.
TSMC plans to increase its wafer production capacity this year to 180,000 units per month based on 3-nanometer (nm, one-billionth of a meter) process, up 40% from last year. According to TrendForce, TSMC held an overwhelming lead in the foundry market with a 70.4% share in the fourth quarter of last year, while Samsung Electronics ranked second with 7.1%.